Foreign investment in Australia has reached a stunning $3 trillion according to recent figures by The Age newspaper. Globalisation is now well and truly entrenched in the Australian property market, including the local Newcastle market where our team of property and immigration lawyers is seeing increased activity from foreign purchasers, including in commercial property.
We consider it crucial that vendors, developers, purchasers and investors have some understanding of the laws and regulatory framework that is involved with a foreign purchase of commercial property in Australia.
Here are five points to consider if you are involved in a transaction that includes foreign investment in commercial property:
1. A ‘foreign person’ – whether it is a corporation, trustee or individual may require approval from the Foreign Investment Review Board (FIRB) to participate in the purchase of commercial property.
2. The definition of a ‘foreign person’ is broad and a corporation, trustee or individual may be classified as a ‘foreign person’ by association.
3. The value of the ‘foreign persons’ interest in the commercial land is critical in applying the threshold test to determine if an application to FIRB is required.
4. In determining if an application to FIRB is required, the current use and occupation of the land is also relevant.
5. If an application to FIRB is not made and approved prior to the investment, financial penalties plus prohibition on certain actions and disposal orders may be issued.
This piece focuses on commercial property, but it should be noted that FIRB approval is often required for foreign acquisition of residential real estate.
At Baker Love Lawyers we have Newcastle’s largest team of immigration lawyers and some of the most experienced property lawyers in the region. If you require any guidance or advice on how foreign investment laws may affect you or a client, please contact our team at Baker Love Lawyers on +61 2 4944 3322 – we are currently advising clients from all corners of the world on this exact issue!
By Partner and Property Lawyer Dean Frith